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A major shutdown in Texas is expected to severely increase pressure on domestic fuel supplies.
In Houston, a key Texas petroleum refinery is facing a premature shutdown. It currently produces more than 200,000 barrels of fuel per day.
Built in 1918, the facility is operated by LyondellBasell Industries and spans 700 acres.
The facility is scheduled to permanently close by the end of 2023.
Two sources familiar with the issues explained that this is the result of a “major equipment failure.”
According to reports, the refinery processes 268,000 barrels per day (bpd) of oil and produces 92,600 bpd of diesel fuel, 89,000 bpd of gasoline and 44,500 bpd of jet fuel.
In a statement, LyondellBasell said, “The Houston Refinery is currently operating as planned.”
“LyondellBasell previously announced it will cease operations of the Houston Refinery no later than December 31, 2023. In the interim, the company will continue serving the fuels market, which is expected to remain strong near-term.”
“The company determined that exiting the refining business, by the end of next year, is the best strategic and financial path forward,” the company added.
More on this story via Daily Caller:
The refinery is among the top 25 largest-capacity facilities in the U.S., according to the Energy Information Administration. Overall, operating U.S. refineries had a capacity of about 17.7 million bpd of oil and produced about 9.5 million bpd of gasoline, 4.7 million bpd of diesel fuel and 1.3 million bpd of jet fuel in 2021.
Meanwhile, six refineries with a capacity of about 801,000 bpd of oil have shuttered over the last two years amid the pandemic, federal data showed. In addition, five refineries with a capacity of 408,100 bpd of oil are idle, the largest number of idle refineries since 2012.
“The COVID pandemic really drove down gasoline and diesel demand which accelerated some things that were already happening,” Geoff Moody, the vice president of government relations at the American Fuel & Petrochemical Manufacturers, previously told TheDCNF.
“There was already some contraction happening in the industry as a result of projected declines in U.S. gasoline demand into the future and companies just deciding that the assets were better used as other projects or shut down completely,” he continued. “Some of its been very policy-driven and companies decided that it wasn’t worth it to keep operating those assets.”
But the continued decline in domestic refinery capacity could signal long-term domestic fuel supply shortfall, Reuters reported. Diesel fuel supplies have hit all-time lows on the East Coast and gasoline prices have soared to multiple records in recent weeks.
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